IE6202: Warehousing Systems
Instructor: Spyros Reveliotis
Office: Room 316, ISyE Bldng
tel #: (404) 894-6608
e-mail: [email protected]
homepage: www.isye.gatech.edu/~spyros
“Course Logistics”
• Office Hours: 1:30-2:30pm TuTh (also an open-door
policy will be generally adopted, but an appointment
arranged by e-mail is preferred)
• Grading policy:
–
–
–
–
–
Homework & Projects: 30%
Midterm: 30% (Tent. Date: Thursday, Oct. 17)
Final: 40% (Date: Monday, Dec. 9)
Exams closed-book, with 3 pages of notes per exam
Make-up exams and Incompletes: Only for very serious reasons,
which are officially documented.
“Course Logistics” (cont.)
• Course Reading Materials
– J. Bartholdi and S. Hackman, “Warehouse and Distribution
Science”, Release 0.1.2, unpublished manuscript, 2000, URL:
http://www.isye.gatech.edu/~spyros
– Lectures posted on the course Web-site accessed by my homepage
– Material posted on the Georgia Tech Library electronic reserves
– Books on reserve:
• Tompkins et al., “Facilities Planning”, John Wiley & Sons,
1996.
• Heragu, S., “Facilites Design” PWS Publishing Co., 1997.
• Francis et al. “Facility Layout and Location: An analytical
approach”, 2nd ed. Prentice Hall, 1992.
• Askin and Standridge, “Modeling and Analysis of
Manufacturing Systems”, John Wiley & Sons, 1993.
Course Objectives
(What is this course all about?)
– An introduction to the fundamental concepts and issues and
algorithms involved in the design and operation of contemporary
warehouses and distribution centers
– In particular, a balanced development of the following issues:
• A systematic exposition of the organization and operation of
contemporary warehouses, and their role in the overall supply chain
• A systematic presentation of the equipment involved, its basic
attributes and functionality, and its connection to the sought
efficiencies
• A decomposition of the overall warehouse deisgn, operations
planning and control problem to a series of sub-problems, and the
development of analytical/quantitative methodologies for addressing
these sub-problems
• Implementation of (some of) these methodologies on some basic
computational tools used in practice (mainly through the project
assignments)
Next...
• Understanding the role of warehouses in contemporary distribution
networks
• A description of the warehouse operations and equipment
• A (conceptual) description of the major design, planning and control
problems arising in contemporary warehousing
• Key References
– J. Bartholdi and S. Hackman, “Warehouse and Distribution
Science”, Release 0.1.2, unpublished manuscript, 2000, URL:
http://www.isye.gatech.edu/~spyros/: Chpts 1-4
– G. Sharp, “Warehouse Management”, Chpt 81 in Handbook of
Industrial Engineering, by G. Salvendy (ed.), John Wiley & Sons,
NY, 2000.
– Tompkins et al., “Facilities Planning”, John Wiley & Sons, 1996:
Chpt. 9
– B. Rouwenhorst et. al., “Warehouse design and control:
Framework and literature review”, European Journal of OR, Vol.
122, pgs 515-533, 2000.
– Yoon, C. S. and Sharp, G., “A structured procedure for analysis
and design of order pick systems”, IIE Trans., Vol. 28, pgs 379389, 1996
The role of warehousing in
contemporary distribution networks
• Buffer: It holds inventory for downstream stages of the
supply chain, in order to allow the entire production /
distribution network to deal efficiently with the systematic
and random variation in the network operations, or to
exploit significant economies of scale.
– Typical sources/examples of systematic variation
• product seasonalities (e.g., Toys R Us, CVS merchandise)
• cyclical / batched production due to large set-up costs
– Typical sources of random variation
• variations in transportation times due to weather, traffic congestion,
bereaucracy, etc.
• variations in production times due to unreliable operations, unreliable
suppliers
– Typical economies of scale involved
• Price breaks in bulk purchasing
The role of warehousing in
contemporary distribution networks (cont.)
• Consolidation center: It accumulates and consolidates
products from various points of manufacture within a
single firm, or several firms, for combined shipment to
common customers.
• Consolidation allows to control the overheads of
transportation operations by:
– allowing the operation of the carriers to their capacity, and
therefore, the more effective amortizing of the fixed transportation
costs
– reducing the number of shipping and receiving operations
• Cross-docking: Consolidation without staging
The role of consolidation in
contemporary distribution networks
Retailers
Manufacturers
Manufacturers
Consolidator
Retailers
The role of warehousing in
contemporary distribution networks (cont.)
• Value-Added-Processing (VAP): Increasingly, warehouses
are required to undertake some value-added-processing
tasks like:
– pricing and labeling
– kitting (i.e., repackaging items to form a new item; e.g., “beauty”
products)
– light final assembly (e.g., assembly of a computer unit from its
constituent components, delivered by different suppliers)
– invoicing
• In general, this development is aligned to and suggested by
the idea/policy of postponement of product differentiation,
which allows for customized product configuration, while
maintaining a small number of generic product
components.
Warehouse classification by “customer type”
• Factory warehouse: Interfaces production with wholesalers
– small number of large orders daily
– advance info about order composition
• Retail Distribution warehouse: Serves a number of captive retail units
– advance info about order composition
– carton and item picking from a forward area
– more orders per shift than consolidation/shipping lanes
• Catalog Retailer: A warehouse filling orders from catalog sales
–
–
–
–
a large number of small (frequently single-line) orders
item and, sometimes, carton picking
daily composition of orders usually unknown
only statistical information available
• Support of Manufacturing operations: A stock room providing raw
material and/or work-in-process to manufacturing operations
– many small orders
– only statistical information available about order composition
– stringent time requirements (e.g., response in 30 min)
Product concepts related to the
characterization of material flow in a
contemporary warehouse
• Item (otherwise piece or each): The smallest unit of
product sold by a distribution center, e.g.,
– a 1-liter bottle of a soft drink
– a box of 100 paper clips
• Carton: a paperboard container holding identical product,
usually of a size and weight allowing manual handling;
example dimensions: 14x10x20in or 30x20x40cm.
• Tote: a container usually made of plastic and often used for
storing and handling different products; usually similar in
size to a carton, but re-usable.
Product concepts related to the
characterization of material flow in a
contemporary warehouse (cont.)
• Inner pack: several units of a product secured together and
sold by the distribution center as a unit, if many items are
contained in a carton, and purchase quantities per item are
large; a carton contains several inner packs.
• Pallet: a set of cartons or totes of identical product
arranged in a cubical pattern and usually supported by a
base that may be of wood or plastic; example dimensions
are 40x48x54in and 80x120x100cm.
• Mixed unit load: a set of cartons or totes of different
products arranged to a cubical pattern similar to a pallet,
often wrapped or strapped for stability.
• Overpack: a large carton or tote containing different
products; smaller than a pallet but larger than a carton, so
that manual handling may be difficult.
Product concepts related to the
characterization of material flow in a
contemporary warehouse (cont.)
• Stock Keeping Unit (SKU): a set of product(s), packaged
in a pre-specified manner, that it is identified as a distinct
entity for distribution purposes; e.g.,
– a 2-liter bottle of Coca-Cola Classic
– 6 2-liter bottles of Coca-Cola Classic packed in a carton
– 12-ounce cans of Coca-Cola Classic, packed 24 in a carton.
• Order: a document from a customer, requesting specific
SKU’s in specific quantities.
• Line item: a “line” in an order document designating a
specific SKU and quantity
A schematic representation of the
warehouse material flow
Replenishment
Case
Picking
Reserve Storage
and
Pallet Picking
Replenishment
Broken
Case
Picking
Accumulation, Sortation & Packing
Direct
putaway
to reserve
Direct
putaway
to primary
Receiving
Shipping
Cross-docking
The major warehouse operations
• Inbound processes
– Receiving (~10% of warehouse operating costs): the collection of
activities involved in
• the orderly receipt of all materials coming into the warehouse;
• providing the assurance that the quantity and quality of such materials
are as ordered;
• disbursing materials to storage or to other organizational functions
requiring them.
– Put-away (~15% of warehouse operating costs): the act of placing
merchandise to storage; it includes
• determining and registering the actual storage location(s)
• transportation
• placement
The major warehouse operations (cont.)
• Outbound processes
– Processing customer orders (typically done by the computerized
warehouse management system of the facility): This set of
activities includes
• checking that the requested material is available to ship;
• if necessary, coordinating order fulfillment with other facilities of the
distribution network;
• producing the “pick” lists to guide the order picking and the necessary
shipping documentation;
• scheduling the order picking and the shipping activity.
– Order-picking (~55% of warehouse operating costs): the set of
physical activities involved in collecting from the storage area the
materials necessary for the fulfillment of the various customer
orders, typically identified as:
•
•
•
•
traveling (~55% of the order picking time)
searching (~15% of the order picking time)
extracting (~10% of the order picking time)
documentation and other activities (~20 % of the order picking time)
The major warehouse operations (cont.)
• Outbound processes (cont.)
– Checking: Checking orders for completeness (and quality of
product)
– Packing: Packaging the merchandise in appropriate shipping
containers, and attaching the necessary documentation / labels.
– Shipping: The activities of
• preparing the shipping documents (packing list, address label, bill of
lading);
• accumulating orders to outbound carrier;
• loading trucks (although, in many instances, this may be the carrier’s
responsibility).
– Others: Handling returns, and performing the additional valueadded-processing supported by contemporary warehouses, as
discussed in a previous slide.
…or in Yoon and Sharp’s representation...
RECEIVING
pallets
PALLET RESERVE
Breakdown
function
pallets
pallets
(items
cases)
pallets
(items
totes)
cases
cases
overpacks
mul
pallets
CASE PICK
cases
cases
cases
ITEM PICK
totes
(cases)
items
(items
cases)
totes
SORTING A
totes
totes
SORTING B
totes
cases
overpacks
UNITIZING
totes
mul
cases
pallets
overpacks
SHIPPING
(items
cases)
totes
Consolidation
Function
Operational Cost Breakdown
20%
10%
15%
Receiving
Putaway
Order Picking
Others
55%
The major concerns underlying the
organization of order-picking
• Establish an efficient operation by controlling the orderpicking labor costs, especially those due to traveling, and
• maintain a high level of responsiveness to customer orders,
while
• preserving the order integrity.
Responsiveness
Costs
Quality
How?
• By organizing the associated work-flow so that it presents
– high pick density, i.e., average number of picks per foot of travel
– short (order) flow time, i.e., the amount of time elapsed between
the arrival of an order into the warehouse management system and
the time it is loaded on the shipping carrier,
• while providing the appropriate “mechanisms /
procedures” to
– maintain the order integrity.
Major mechanisms for increasing the
pick density
• Establishing a high SKU density, i.e., the number of SKU’s
encountered per foot of travel.
– In general, the effectiveness of this approach will depend on the
characteristics of the stored product and the equipment involved in
its storage and retrieval.
• Maintaining a “forward” pick area, containing a certain
quantity from each of the most popular SKU’s in the
facility.
– The implementation of this approach necessitates a systematic
procedure for determining the items to be stored in the forward
pick area and the associated amounts, in a way that it balances the
incurred space and labor (replenishment) costs.
– In case of a dynamically varying demand, the implementation of
this idea might involve the frequent reconfiguration of the facility.
Major mechanisms for increasing the
pick density
• Batching the orders, i.e., have the workers retrieve more
than one order at each trip in the storage area.
– Requires an additional sortation process:
• sort-while-pick: the picker carries a compartmentalized container that
allows the separate accumulation of each order on its picking list
• downstream sorting: sorting of the orders takes place at a dedicated
station of the facility, possibly involving some sophisticated
equipment (sorting conveyors).
– Sortation implies additional space, labor and equipment costs
– Batching is another complex economic decision, especially for
“medium size” orders
Major mechanisms for reducing the
order flow time
• Maintaining a high pick density (which translates to a high
level of worker productivity).
• Appropriately parallelizing the order processing, i.e., have
each order being processed by more than one worker.
– A critical aspect for selecting the order parallelization scheme is
the order work content, typically quantified as follows:
• order work content = (number of picks in the order) x (average
person-hours per pick)
– If the total work of picking and loading an order is small enough,
then orders are repeatedly assigned to the next available worker.
– If the orders are large and/or span distant regions, then, they must
be parallelized.
– Parallelization typically involves a zoning scheme.
Warehouse zoning
Zone: A part of the warehouse to which an order picker is
restricted, e.g., a 40-aisle system divided into zones of 10 aisles
each.
In case of warehouse systems involving automated storage and
retrieval equipment, a zone can be also defined by one unit of this
equipment, e.g., a carousel.
Zoning patterns:
Progressive Zoning
Parallel/Simultaneous Zoning
To packing and shipping
Z1
Order
Z2
Z3
Z4
Z5
To sorting and consolidation
Z1
Z2
Z3
Order
Z4
Z5
Combining Batching with Zoning:
the resulting order-flow patterns
• Single-order pick: one picker works on one order at a time
until the order is filled
• sort-while-pick, no zoning: one picker works on several
orders at a time with a container/vehicle that has
compartments for maintaining the order integrity
• batch-picking with downstream sorting, no zoning: several
orders are picked by one person completely, often applied
with conveyor transport of items to the sorting area
• single-order-pick with zoning, progressive or parallel: an
order is split into sub-orders by zone and a picker in each
zone fills the corresponding sub-order
Combining Batching with Zoning:
the resulting order-flow patterns
• sort-while-pick with zoning: an order is split into suborders by zone and a picker in each zone fills the
corresponding sub-orders using a set of containers or a
vehicle that has compartments for maintaining order
integrity
• batch picking with downstream sorting and zoning, usually
simultaneous: several orders are split into sub-orders and
the sub-orders for each zone are filled by the picker(s)
operating in that zone
Pick Wave Planning
• Time window: a portion of the day/shift during which a set
of orders is released and fully processed, e.g., four 2-hour
time windows in an 8-hour shift.
• Pick wave: The set of orders processed during a time
window.
• Necessitated by, e.g.,
– a downstream sorting system that limits the number of orders that
may be in process at any time (e.g., the number of streams/output
chutes in a conveyor-based sortation system).
– a forward pick area with a storage capacity insufficient to satisfy
the entire daily demand, and therefore, must be replenished, but
replenishment cannot occur simultaneously with picking activity
for, e.g., safety or efficiency reasons.
• Small time windows tend to cause workload imbalances
and longer travel times, but they also lead to smaller
equipment and/or space costs and smaller order completion
times.